Subscribe To

Sunday, June 24, 2012

J. C. Penney Fires Its President After Company Loses Money, Stock Price Falls But Don’t Worry

Corporate Execs Don’t Get Fired the Way the Rest of Us Do

Mitt Romney and the
defenders of those who acquire massive wealth frequently cite the rationale
behind that is that these are the people who are taking the risks in the economy
today. That of course, is pure fantasy. The only risk these people take is whether or
not the caviar is fresh on the private jet.

Case in point is
formerPresident
of J.C. Penny Michael Francis. How
bad did Mr. Francis do? Well he was
certainly heralded when he joined J. C. Penney.

Back in October, J.C.
Penney Co. JCP hired Michael Francis away from Target
Corp. with great fanfare, saying he had the
"vision and courage" to turn around the department store chain.

Well, maybe not.

As
president, Mr. Francis was responsible for marketing and for getting Penney's
product lines together—a pivotal merchandising job as Mr. Johnson sought to
lure customers in with better clothes at everyday low prices.

But
in mid-May, the company reported a larger-than-expected $163 million loss on a
20% drop-off in sales. Mr. Francis's abrupt departure is a acknowledgment that
the new strategy hasn't caught on.

And the stock market was not too pleased either.

Penney's
shares—which soared a year ago on word that Mr. Johnson would come on board,
have dropped 27% since mid-May. To conserve cash, it has cut its dividend.

As for the so-called marketing genius, here is a sample of
his brilliance.

Early
on, Mr. Francis had focused on atmospheric ads in an effort rebrand the
110-year-old department store. Penney's logo was changed to a square around
"JCP" to represent what it calls "fair and square pricing."
Brightly colored television spots featured snippets of Americana set to catchy music but offered
little detail on products or pricing.

In corporate America when
you fail miserably you don’t experience what the rest of us experience when
we fail miserably.

His
brief stint will have been lucrative for the departing executive: Mr. Francis
will have collected more than $15 million in salary, sign-on bonus and severance
payments, according to a person familiar with the matter.

Capitalism at work, and let’s make sure Congress
doesn’t raise taxes on the well deserving $15 million that Mr. Francis put in
his pocket as the door hit his butt on his way out.